Nailing it Down

By Dave Murnen and Pat Beaty

Although January has come and gone, that doesn’t mean you have to wait a whole year to get on that budget you’ve been thinking about.

February has just presented us with a new start. So, if you haven’t gotten around to your New Year’s resolution of tackling your debt, we have good news: It’s not too late!

When it comes to New Year’s resolutions, it seems like organizing, diet and exercise and budgeting are the big three. They all deal with habits and self discipline. And, depending on your particular situation, one, two or all of them can seem overwhelming. The good news is that in each of these areas, small changes over time can make a big difference.

While, we promise we won’t be talking about healthy habits for your body, we do have expertise in working with budgets.

Typically we work with folks to help them figure out how they can afford to buy a home, but we here at NeighborWorks of Grays Harbor are also available, free of charge, if you need help creating a budget. Just call to make an appointment with our certified housing counselor, Julie Galligan.

Meanwhile, here are a few tips to get a few tips on getting a handle on budgeting.

JUST GET STARTED

Sometimes aiming for perfection can be the enemy of improvement. That can definitely be true when dealing with budgeting.

If you are like most people, you have some financial concerns and some financial goals. Instead of thinking you will solve all of them this month, if you can change your thinking to embarking on a “budgeting journey,” you will likely get closer to your goal instead of getting waylaid by disappointment.

So, we suggest you just get started!

WRITE IT DOWN

To begin this journey, two beginning steps must be taken.

First, do your best to estimate what income comes in every month to your household.

Obviously for some folks that’s super easy; they are paid the on the same dates, once or twice a month. Other folks have it slightly harder; if they’re paid every two weeks, their monthly income can vary a couple of times a year. Still others have quite varied incomes. Perhaps they own a business or work on call or on commission. Whatever your situation, figure out what income comes in and when it’s received.

If in doubt, be conservative with your estimate. It’s a lot easier to “deal with” more money than expected in your budget, than less.

After you figure out what your income is, begin doing your best to write down your regular expenses.

Go back through your memory, checkbook, credit card statements, bills paid online, etc., to see what you spent in the past month on your housing, insurance, car, power, garbage, cable, phone, groceries, clothing, eating out, transportation, etc.

It’s up to you how to organize your categories. Is it more convenient for you to put groceries with household sundries such as toilet paper, cleaning solutions, etc.? Or, would you like to track those things separately?

As you begin the process of writing down what you spend, we recommend that you also note when your key bills are due each month. For instance, even if you are following your prescribed budget, you don’t want to do your major grocery shopping the day before your rent is due if you don’t have enough money in your account to cover both.

So, either leave yourself some extra money in your account for wiggle room, or plan ahead which bills are paid on what day of the month.

By the way, as you begin the process, you can do it on anything from budget forms found online, a new budget book found in a stationery store, a computer spreadsheet or a simple piece of paper. Remember, your budget will likely be a living, changing document — especially at the beginning.

Certain bills — like “power” or “gifts” — can change a lot from December to July. Just do your best to estimate what your average is for each category. It’s also helpful to know what the range is (your PUD bill is a good example) when key bills vary from month to month, so you can plan ahead.

The point is you’ll need to take a good look at your “actuals” before you decide how much money you “should” be spending in certain areas, or where you should cut spending.

THE LATTE FACTOR

If you’re thorough and honest with yourself and what you’re spending, we predict that you will likely be surprised by the “latte effect.” That is, most folks are surprised to see written down how quickly that daily latte, pack of cigarettes, weekly manicure, fast-food stops and drinks with friends add up.

We’re not saying you have to live a pleasure-free existence. However, it is good to see in black and white how much the little “extras” cost so that you can make calculated decisions on what to spend.

For instance, if you’re spending $5 each working day for a fancy coffee, that adds up to more than $100 a month — more than $140 if you’re enjoying it on weekends too. If you decide to make coffee at home most days and just treat yourself once a week, you can easily save $80 to $120 a month and still feel like you have an occasional treat.

Eating lunch out every day or smoking a pack of cigarettes a day can be other big expenses. Once you figure how much it is costing, you can decide if you want to cut the activity out totally or just cut it down. Even cutting it down can save a lot of money.

Of course, the same is true for expensive cable TV packages, cellphones or frequent trips to the movies.

Again, it’s not for anyone else to decide which things are “worth it” to you. However, if you start writing down your actual expenses, you can see what the real costs are of your various expenditures and make informed decisions for yourself.

Dave Murnen and Pat Beaty are construction specialists at NeighborWorks of Grays Harbor County, where Murnen is executive director. This is a nonprofit organization committed to creating safe and affordable housing for all residents of Grays Harbor County. For questions about home repair, renting, remodeling or buying, call 360-533-7828 or visit 710 E. Market St. in Aberdeen.